Home stretch

The first month of the year is entering the home stretch, but thus far today most of the stetching has been performed by those engaged in a yawn. It's been a quiet start to the week to say the least, with the "highlights" dominated by poor Japanese retail sales (though that data is flawed) and a strong retail survey in the UK.

Although equities have done OK in Asia and Europe, EM remains on the back foot. Happily, the carry currencies in the G10 have as well, with sterling in particular putting in a poor show.

This week may prove to be absolutely critical for the US, as Q4 GDP, consumer confidence, the FOMC decision, ISM, and payrolls are all released this week. Macro Man has a sneaky suspicion that bonds will be at either 5% or 4.70% when it's all said and done.

He is tempted to go long the inflation breakeven by buying TIPS and selling nominal bonds....more thought is required, but the deluge of information should provide sufficient volatility to be able to leg the breakeven at a reasonable level.

For now though, let's see how the stock market holds up, as it holds the key to risky asset performance in the near term.